FOREIGN DIRECT INVESTMENT FROM INDIA PERSPECTIVE

1. FOREIGNDIRECTINVESTMENT
FROM INDIA PERSPECTIVE

2.  A foreign direct investment (FDI) is
an investment in the form of a
controlling ownership in a business in
one country by an entity based in
another country.

3. INTENT &OBJECTIVEOF FDI
Investment in Industry & commerce is
essential for growth of nation . The Intent &
objective OF Government of India to
attract & Promote FDI in order to
supplement domestic capital, technology
and skills for accelerated economic growth.
Foreign Direct Investment, as distinguished
from portfolio investment, has the
connotation of establishing a ‘lasting
interest’ in an enterprise that is resident in
an economy other than that of the investor

4. ENTRY ROUTE FOR FDI IN INDIA
Under FDI Scheme Investment can be made in shares,
fully & mandatorily convertible debenture, fully &
mandatorily convertible preference share of Indian
Company.
Automatic Route : FDI in sector/activities to the extent
permitted under automatic route does not require any
prior approval of government.
FDI Up to 100 percent is allowed under activities/sector
permitted under automatic route
Government Approval Route : Under the Government
Route, prior approval of the Government of India is
required. Proposals for foreign investment under
Government route, are considered by FIPB*
*The FIPB will be replaced by a new mechanism under
which the proposals will be approved by the ministries
concerned as per the standard operating procedure
approved by the Cabinet

5. WHOCAN INVEST IN INDIA
 Person resident outside India & Entity Incorporated
outside India.
 A citizen of Bangladesh or an entity incorporated in
Bangladesh can invest only under the Government
route.
 a citizen of Pakistan or an entity incorporated in
Pakistan can invest, only under the Government
route, in sectors/activities other than defence,
space and atomic energy and sectors/activities
prohibited for foreign investment
 NRIs resident in Nepal and Bhutan as well as
citizens of Nepal and Bhutan are permitted to
invest India on repatriation basis, and amount of
consideration for investment to be in free foreign
exchange only

6.  Foreign Institutional Investor (FII) & Foreign Portfolio
Investor (FPI) can invest in capital of Indian Company
under portfolio investment scheme individually up to
10 percent & collectively up to 24 percent of the
capital of the company
 A SEBI Registered Foreign venture Capital Investor
may contribute up to 100 percent of the capital of an
Indian Company including start-ups irrespective of
the sector in which it is engaged

7. ELIGIBLE ENTITIES FOR FDI
 FDI In Indian Companies
Indian Companies can issue capital instruments like
shares, Convertible Debentures against FDI
 FDI in Partnership firm/ Proprietary concern
A NRI/ PIO can invest by way of contribution on non-
repatriation basis provided that remittances is
received from abroad and firm is not engaged in any
agriculture/ plantation activities or real estate
business

8.  FDI in Limited liability Partnership
FDI in LLPs is permitted subject to following
conditions
i.) FDI is permitted under the automatic route in
those sector/ activities where 100 percent FDI is
allowed and there are no FDI Linked performance
conditions
ii.) FDI in LLP is subject to compliance of condition of
LLP ac, 2008
 FDI inTrust
FDI is not permitted in Trusts other than in ‘VCF’
registered and regulated by SEBI and ‘Investment
vehicle’.

9. PROHIBITEDSECTORS FOR FDI
FDI is prohibited in:
a) Lottery Business including Government/private
lottery, online lotteries, etc.
b) Gambling and Betting including casinos etc.
c) Chit funds
d) Nidhi company
e)Trading inTransferable Development Rights (TDRs)
f) Real Estate Business or Construction of Farm
Houses
g) Manufacturing of cigars, cheroots, cigarillos and
cigarettes, of tobacco or of tobacco substitutes
h) Activities/sectors not open to private sector
investment e.g.
(I) Atomic Energy and (II) Railway operations